Commerce Bancshares, Inc. · NASDAQ:CBSH
Commerce Bancshares — Q4 2024 Earnings Presentation
48 slides from Commerce Bancshares's earnings presentation, January 2025
Slide 1: Commerce Bancshares, Inc. Investor Update 4th Quarter 2024
COMMERCE BANCSHARES, INC. INVESTOR UPDATE 4th Quarter 2024
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT A number of statements we will be making in our presentation and in the accompanying slides are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements of the Corporation’s plans, goals, objectives, expectations
Slide 3: Commerce Bancshares at a glance
COMMERCE BANCSHARES TOTAL ASSETS $32.0 159 YEARS IN BUSINESS BILLION TOTAL DEPOSITS $25.3 BILLION 43RD LARGEST U.S. BANK BASED ON ASSET SIZE2 MARKET CAP TOTAL $17.2 LOANS3 BILLION $8.4 BILLION $9.8 COMMERCIAL CARD VOLUME 20TH BILLION AS OF DECEMBER 31, 2024 LARGEST U.S. BANK BASED ON MARKET CAP2 TOT
Slide 4: Super-Community Bank Platform: A consistent strategy with a long-term view
SUPER-COMMUNITY BANK PLATFORM A consistent strategy with a long-term view Customer relationship-based: Community Bank Challenge Accepted.® Super-Regional Bank • Award-winning High-performing teams and • Sophisticated payment customer service system capabilities engaged workforce • Focus on the full
Slide 5: Track Record of Long-Term Outperformance
TRACK RECORD OF LONG-TERM OUTPERFORMANCE Revenue Diversification Deposit Franchise Balanced earnings profile, fee revenue $23.9 billion in low-cost, diverse at 37%1 of total revenue, bolstered by deposits2 with peer-leading growing wealth and national payments historical deposit betas businesses Cre
Slide 6: A Full-Service, Diversified Operating Model
A FULL-SERVICE, DIVERSIFIED OPERATING MODEL Card, Wealth & Deposit fees provide stable, growing revenue source Revenue Source Diversification Non-Interest Income Compared to Peers1 $ in millions $800 2% 5% $560 $573 $616 $600 $547 6% $506 4% $400 4% 10% $200 4% 4% 6% $0 Commerce 2020 2021 2022 2023
Slide 7: Well-Diversified Loan Portfolio
WELL-DIVERSIFIED LOAN PORTFOLIO Loan Portfolio Diversification YTD Average Loans2 $ in millions Compared to Peers1 3% 28% $16,783 $17,090 23% 3% $15,916 $15,686 $15,570 11% $14,243 37% Commerce 21% Peers Bank 2019 2020 2021 2022 2023 2024 Banks 2024 Loan Growth by Category (QTD Average loans Dec. 20
Slide 8: A Strong Culture Is the Foundation of Our Success
A STRONG CULTURE IS THE FOUNDATION OF OUR SUCCESS At Commerce, our core values shape the way we live and work: We have a We collaborate We act with We are We strive for long-term as one team integrity customer- excellence view focused How we put our culture into practice: What defines us, ultimately
Slide 9: Commerce's Focus Extends Beyond Banking
COMMERCE’S FOCUS EXTENDS BEYOND BANKING We seek opportunities to help make our communities and our company a better place to live and work 2024 Engagement MORE THAN and Enablement2 500 Sense of Consistently scoring above the U.S. Financial Services norms for Belonging2 engagement, enablement and 83%
Slide 10: Recent Recognition
RECENT RECOGNITION 2025 2024 2024 Newsweek Forbes U.S. News & World Report America’s Best Regional Banks1 Best Employer by Best Companies to Work 2 consecutive years State: Missouri2 For in the Banking Industry3 2024 2024 2024 Bank Director Forbes Newsweek Top 25 U.S. Banks4 America’s Best Greatest
Slide 11: Commerce Bank Maintains Solid Performance Over Time
COMMERCE BANK MAINTAINS SOLID PERFORMANCE OVER TIME Return on Average Assets 2.0% 1.5% ROAA 15-yr average 1.0% CBSH: 1.37% 0.5% Peers: 1.04% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Commerce Peer Median Large Bank Median Return on Average Common Equity 20.0% 15
Slide 12: Long-Term View: Net Income and Earnings per Share
LONG-TERM VIEW: NET INCOME AND EARNINGS PER SHARE $600 $4.00 Earnings Per Share Net Income $3.50 Earnings per Share $500 Net Income $3.00 $400 $ 000s $2.50 $300 $2.00 $200 $1.50 $100 $1.00 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Dividends $0.55 $0.58 $0.61 $0.67 $0.78 $0.85 $0.86 $0.92 $0.
Slide 13: Steady Shareholder Returns
STEADY SHAREHOLDER RETURNS as of December 31, 2024 Total Shareholder Returns Annualized Comparison Indexed, 12/31/2004 = $100 Total Shareholder Returns $800 40% CBSH KBW Bank $700 S&P 500 35% 30% KBW Regional S&P 500 $600 25% 20% $500 COMMERCE 15% $400 10% 5% $300 KBW 0% REGIONAL 1 Year 3 Year 5 Yea
Slide 14: Strategic Position
STRATEGIC POSITION 14
Slide 15: Strategic Posture: Maintaining the Balance
STRATEGIC POSTURE: MAINTAINING THE BALANCE STRONG PERFORMANCE with Disciplined focus on ongoing refinement of the PRIORITY BLUE CHIP “Core Bank” investments • Super-Community Bank • Enhancing our platform People Leadership • Relationship-based banking • Workplace Optimization • High-touch customer s
Slide 16: Digital Technology: Application Modernization
DIGITAL TECHNOLOGY: APPLICATION MODERNIZATION Application Modernization is the focused effort to re-platform, replace, or significantly improve application platforms for the express purpose of modernizing features and capabilities, improving total cost of ownership, and/or reducing operating risk. P
Slide 17: Enterprise Digital Strategy
MEETING OUR CUSTOMERS WHERE THEY ARE: ENTERPRISE DIGITAL STRATEGY Our Vision Why it’s Important Transform the digital experience by staying • Our current and potential customers’ current on digital trends and creating behaviors have changed, and they expect seamless digital ecosystems that place mor
Slide 18: We're Built for You: Commercial Banking
WE’RE BUILT FOR YOU: COMMERCIAL BANKING Revenue Revenuegrowth growthopportunities opportunities Financing solutions and deposit capabilities customized for your business • Working Capital Line of Credit • Commercial Real Estate • Full suite of cash management solutions • Term Loans • ESOP Loans • Ro
Slide 19: Industry-Leading Commercial Payments Capabilities
INDUSTRY-LEADING COMMERCIAL PAYMENTS CAPABILITIES Innovative payments solutions to manage payables and receivables that enhance cash flow, streamline processing and increase efficiencies Treasury Commercial Payments Merchant Management Card Revenue Volume Revenue Volume $216 $71 $9.8 $8.6 MILLION MI
Slide 20: Healthcare is our specialty
We don’t just serve the healthcare industry. It’s our specialty. Patient Receivables Engagement Management Solutions Solutions • Patient Financing • Receivables • Online Bill Pay Optimization • Patient Refunds • Reconciliation Automation • Healthcare Lockbox Accounts Payable Traditional Solutions Ba
Slide 21: Expansion Markets Offer Growth Opportunities
EXPANSION MARKETS OFFER GROWTH OPPORTUNITIES Expansion Market Loan Growth 1 Core Banking and Expansion $ in billions $3.3 $3.5 Market Footprint $2.9 $2.5 $2.6 Expansion Market $2.3 Loan Growth +54% since 2019 2019 2020 2021 2022 2023 2024 Expansion Market Fee Income Growth $ in millions $32.0 $27.0
Slide 22: Commerce Trust Company wealth management
For high-net-worth individuals who are looking to simplify their complex financial life, Commerce Trust Company provides a full-service approach to wealth management. 19TH $75 $45 Largest Among Bank-Managed BILLION BILLION Trust Total Client Assets Under Companies1 Assets2 Management Total Client As
Slide 23: Wealth Key Growth Initiatives
Wealth Key Growth Initiatives Strengthening our Wealth Brands • Utilize new private banking loan and deposit system to offer specialized products, services and automation • Continued expansion into new concentrated wealth markets through de novo and acquisition efforts • Expand our integrated referr
Slide 24: Consumer Banking Snapshot
CONSUMER BANKING SNAPSHOT 142 Branches 253 ATMs $12.5 $3.8 803 BILLION BILLION THOUSAND Consumer Consumer Consumer Deposits1 Loans1 Households2 Focus on Digital 4.7 $80,967 27.7% 4.6 Commerce Bank Digital Loan Sales Mobile Deposit Use App Rating3 (000s) Period end balances. All information as of Dec
Slide 25: Liquidity and Capital
LIQUIDITY AND CAPITAL 25
Slide 26: Deposit Balance Trends
DEPOSIT BALANCE TRENDS Segment view $ in billions Commercial Consumer Wealth $13.4 $12.8 $12.0 $11.9 $12.2 $12.3 $12.3 $12.3 $12.5 $11.3 $10.4 $10.3 $10.5 $10.2 $9.9 $9.8 $3.0 $2.8 $2.3 $2.4 $2.3 $2.4 $2.4 $2.5 2020 2021 2022 2023 3Q24 4Q24 3Q24 4Q24 2020 2021 2022 2023 3Q24 4Q24 3Q24 4Q24 2020 2021
Slide 27: Opportunities to Enhance and Protect Net Interest Income
OPPORTUNTIES TO ENHANCE AND PROTECT NET INTEREST INCOME Quarterly Net Yield on Interest Earning Assets • Purchases of investment securities in Q4 totaled $573MM at a weighted average yield of approximately 4.45%. 4Q 2023 3Q 2024 4Q 2024 • Cash flows from maturities and paydowns of investments and 3.
Slide 28: High Quality, Highly Liquid and Diverse Investment Portfolio
HIGH QUALITY, HIGHLY LIQUID AND DIVERSE INVESTMENT PORTFOLIO Duration Composition of AFS Portfolio QTD – Dec. 31, 2024 Avg Rate (yrs) As of December 31, 2024 Treasury & agency1 3.62% 3.3 Total available for sale securities Average balance: $9.1 billion, at fair value Municipal 2.01%2 4.6 MBS 2.17% 5
Slide 29: Sound Capital and Liquidity Position
SOUND CAPITAL AND LIQUIDITY POSITION Tier 1 Risk-Based Capital Ratio1 Loan to Deposit Ratio CBSH Peer Median: 12.2% Large, stable deposit base 16.7% 68% Average PB 15.8% Core Deposits Loan to HOMB 14.7% Deposit Ratio 3 CFR 14.0% $22.9 Commerce 84% UBSI 13.8% Average Loan to HWC 13.8% Billion2 Deposi
Slide 30: Summary of Fixed & Floating Loans
SUMMARY OF FIXED & FLOATING LOANS Over 60% of total loans are variable; 67% of commercial loans have floating rates Fixed Variable Business Construction Business RE Commercial Total Loans: $6.1B Total Loans: $1.4B Total Loans: $3.7B 4% 36% 40% 64% 60% 96% Personal RE Consumer HELOC Consumer Card Tot
Slide 31: Commercial Real Estate Breakdown
COMMERCIAL REAL ESTATE BREAKDOWN Real Estate - Business Loans: Office Outstanding Balances by Geography1 Other Real Estate - Business Loans Midwest OH States Real Estate - % of Total Business Loans Loans $3.7 billion CO 5.6% IL 4.7% Owner- 4.8% 3.0% Owner – Occupied 7.2% 33.8% occupied TX 4.9% Offic
Slide 32: Maintaining Strong Credit Quality
MAINTAINING STRONG CREDIT QUALITY Net Loan Charge-Offs (NCOs) Allowance for Credit $ in millions Losses on Loans (ACL) $ in millions $13.2 $10.7 $309.2 $333.1 $9.5 $9.6 $8.0 $162.4 1.30% $160.8 1.34% $162.7 .25% .22% .19% .17% .94% .94% .95% .16% 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 NCOs- CBSH NCO/Average
Slide 33: Allocation of Allowance
ALLOCATION OF ALLOWANCE CECL allowances reflect the economic and market outlook Allowance for Credit Losses (ACL) on Loans September 30, 2024 December 31, 2024 $ in millions $175 1.00% Allowance for % of Allowance for % of Credit Losses Outstanding Credit Losses Outstanding 0.96% $ in millions 0.94%
Slide 34: Strong Capital Position – Flexibility in Capital Planning
STRONG CAPITAL POSITION – FLEXIBILITY IN CAPITAL PLANNING 57 consecutive years of regular common cash dividend increases1 Capital Returned to Common Shareholders as a percentage of Net Income2 Cash dividends paid on common stock (left) Total Payout - % (right) Total Payout Ratio (%) $300 200% Common
Slide 35: Financial Results 4Q2024
FINANCIAL RESULTS 4Q2024 35
Slide 36: Financial Performance vs. Prior Years
FINANCIAL PERFORMANCE VS. PRIOR YEARS Net Income Earnings Return on Total Attributable to CBI ($ in Millions) per Common Share Average Assets $526 $3.87 1.72% $488 $477 $3.50 $3.46 1.45% 1.49% YE 2022 YE 2023 YE 2024 YE 2022 YE 2023 YE 2024 YE 2022 YE 2023 YE 2024 Return on Average Period End Loans
Slide 37: 4Q2024 Highlights
4Q2024 HIGHLIGHTS • Earnings of $1.01 per share, compared to $.79 per share in the same quarter last year • PPNR1 of $186MM, an increase of $44MM over the same period last year Performance • ROAA of 1.73% and ROAE of 15.97% • Efficiency ratio of 55.8%, a decrease in Q4 from 56.3% in Q3 • Net Income
Slide 38: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Average Loans: Quarterly Average Increased slightly Balances 4Q24 vs. 3Q24 4Q24 vs. 4Q23 compared to the previous $ in millions 4Q24 $ Change % Change $ Change % Change quarter. Investment securities: Commercial $11,010.7 $62.6 1% -$18.8 0% Purchased $573 million of availabl
Slide 39: Balance Sheet
BALANCE SHEET Loans Deposits QTD Average Balances QTD Average Balances $ billions $ billions 6.35% 6.15% 6.11% -1% $25.2 $24.4 $24.9 0% $7.7 $7.3 $7.4 $17.1 $17.0 $17.1 $6.1 $6.1 $6.1 1.93% 2.00% 1.87% $17.5 $17.1 $17.5 $11.0 $10.9 $11.0 4Q23 3Q24 4Q24 4Q23 3Q24 4Q24 Consumer Loans Loan Yield1 Non-I
Slide 40: Loan Portfolio
LOAN PORTFOLIO Period-End Balances QTD Average Balances $ in 000s 12/31/2024 9/30/2024 12/31/2023 QoQ YoY $ in 000s 12/31/2024 9/30/2024 12/31/2023 QoQ YoY Business $6,053,820 $6,048,328 $6,019,036 .1% .6% Business $5,963,217 $5,966,797 $5,861,229 -.1% 1.7% Construction 1,409,901 1,381,607 1,446,764
Slide 41: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS Pre-Tax, Pre-Provision Net Revenue (PPNR) $ in millions Net Interest Income (+) 4Q24 Comparison Non-Interest Income (+) vs. 4Q23 31.2% Non-Interest Expense (-) vs. 3Q24 1.4% Pre-Tax, Pre-Provision Net Revenue (=) $421 $422 Revenue increased .2% $393 over Q3 and 7.3% over
Slide 42: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS 4Q24 vs. 3Q24 4Q24 vs. 4Q23 $ in millions 4Q24 $ Change % Change $ Change % Change Net Interest Income $266.6 $4.3 2% $18.2 7% Non-Interest Income $155.4 -$3.6 -2% $10.6 7% Non-Interest Expense $235.7 -$1.9 -1% -$15.5 -6% Pre-Tax, Pre-Provision Net Revenue1 $186.3 $2.6 1%
Slide 43: Non-Interest Income Highlights
NON-INTEREST INCOME HIGHLIGHTS 4Q24 vs. 3Q24 4Q24 vs. 4Q23 $ in millions 4Q24 $ Change % Change $ Change % Change Trust Fees: Trust Fees $56.3 $1.7 3% $7.2 15% Increase over prior year mainly due to higher private client fees. Bank Card Transaction Fees 47.8 .2 0% -.0 0% Deposit Account Charges Depo
Slide 44: Non-Interest Expense Highlights
NON-INTEREST EXPENSE HIGHLIGHTS Total Non-Interest Expense: 4Q24 vs. 3Q24 4Q24 vs. 4Q23 Excluding the accrual for the FDIC $ in millions 4Q24 $ Change % Change $ Change % Change Special Assessment in Q4 2023, non-interest expense was flat to Salaries and Employee Benefits $153.8 $.7 0% $6.4 4% the p
Slide 45: Net Interest Income: QTD – December 31, 2024
NET INTEREST INCOME: QTD – December 31, 2024 Quarterly Net Interest Income (Fully taxable-equivalent) • Net interest income (fully taxable-equivalent) $280 3.6% increased $4.3 million over the prior quarter. Net interest income – $260 3.4% • The net yield on interest earning assets 3.2% decreased 1
Slide 46: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS Pre-tax, Pre-provision Net Revenue For The Three Months Ended (DOLLARS IN THOUSANDS) Dec. 31, 2024 Sept. 30, 2024 Dec. 31, 2023 A Net Interest Income $ 266,647 $ 262,351 $ 248,421 B Non-Interest Income $ 155,436 $ 159,025 $ 144,879 C Non-Interest Expense $ 235,718 $ 237,600
Slide 47: Contact Information
Contact Information: Matt Burkemper Senior Vice President, Commerce Bank Corporate Development and Investor Relations 314.746.7485 Matthew.Burkemper@commercebank.com Commerce Bancshares, Inc. Investor Relations website: http://investor.commercebank.com/
Slide 48: Commerce Bancshares, Inc.
] Commerce Bancshares, Inc.